A supply curve and a demand curve are graphical representations that illustrate the relationship between price and quantity in the market. The main difference between the two curves lies in their direction.
The demand curve shows the relationship between the price of a product and the quantity of that product that consumers are willing and able to purchase at various prices. The demand curve slopes downward from left to right, indicating that as the price of a product increases, the quantity demanded decreases, assuming other factors remain constant. This inverse relationship reflects the law of demand, which states that there is an inverse relationship between price and quantity demanded.
On the other hand, the supply curve shows the relationship between the price of a product and the quantity of that product that producers are willing and able to supply to the market at various prices. The supply curve slopes upward from left to right, indicating that as the price of a product increases, the quantity supplied also increases, assuming other factors remain constant. This positive relationship reflects the law of supply, which states that there is a direct relationship between price and quantity supplied.
The difference between the two curves can be observed in their slopes and the underlying economic principles they represent. The demand curve represents consumer behavior and their willingness to pay for a product, while the supply curve represents producer behavior and their willingness to produce and sell a product. The slopes of the curves reflect how changes in price affect the quantity demanded and supplied.
When the price increases, the quantity demanded typically decreases as shown by the downward sloping demand curve. This is because consumers may be less willing or able to purchase the product at higher prices. Conversely, the quantity supplied typically increases as the price increases, as shown by the upward sloping supply curve. Higher prices incentivize producers to supply more of the product to the market, as it becomes more profitable to do so.
In summary, the demand curve reflects the relationship between price and quantity demanded, while the supply curve reflects the relationship between price and quantity supplied. Increases in price lead to a decrease in quantity demanded according to the demand curve and an increase in quantity supplied according to the supply curve.